10 tips for Risk Management in tourism
To protect both your customers and your business, risk management is becoming increasingly important. You should be prepared to deal with potential crises. Identify possible risks for your destination and determine your risk management strategy to set up a plan. Train your staff and team up with stakeholders. In case of a crisis, be clear and honest in your communication. Repositioning may provide opportunities to retrieve your business. These are our top 10 tips for risk management.
Contents of this page
- Why risk management?
- Tip 1: Identify the risks
- Tip 2: Determine your risk management strategy
- Tip 3: Develop a risk management plan for your tourism business
- Tip 4: Team up with stakeholders
- Tip 5: Train your staff
- Tip 6: Test your plan
- Tip 7: Provide clear and honest crisis communication
- Tip 8: Keep informed about possible negative travel advice
- Tip 9: Revive your business after a crisis
- Tip 10: Reposition your business after a crisis
Tourism companies are increasingly facing incidents that involve risks for both tourists and the tourism business. This includes such things as political unrest, terrorist attacks, earthquakes, tsunamis and health-related incidents. These can have a tremendous negative impact on tourism destinations. In addition, the damage to a destination’s image may have even longer-lasting effects than the actual damage from the crisis.
It is important to learn to address risk management issues and reduce the impact of crises and disasters. Crises can also create opportunities; they can shake up the market by making tourists look for new destinations. Countries that are first to come up with a good offer can be winners.
Risk management does not start with a crisis, but much earlier. To be prepared for a crisis, every tourism company should think about risk management. Here are our top 10 tips on how to successfully deal with risks and risk management in tourism.
Top 10 tips on risk management in tourism
- Identify the risks
- Determine your risk management strategy
- Develop a risk management plan for your tourism business
- Team up with stakeholders
- Train your staff
- Test your plan
- Provide clear and honest crisis communication
- Keep informed about possible negative travel advice
- Revive your business after a crisis
- Reposition your business after a crisis
Make an inventory of the potential hazards and risks that could threaten your destination.
This could concern:
- natural hazards
- technological hazards
- biological hazards
- civil or political hazards.
Identify the nature of the potential crisis.
- speed of onset
- scope of impact
- destructive potential.
A good risk analysis maps out the type of risk your destination can encounter. It also tells you what impact it can have on the tourism sector in your destination.
See this Tourism Risk Management Guide and its accompanying Workbook by the Asia-Pacific Economic Cooperation (APEC) for more information on identifying risks. Tourism Australia’s Risk Management Policy also provides useful information on how to identify and analyse risks.
There are several strategies for risk management, including
- avoiding the risk
- reducing the likelihood of the consequences
- transferring the risk
- retaining the risk.
Learn from previous crises and disasters that have taken place in your area. Also look into similar crises that have occurred in other areas.
This strategy means eliminating the risk by completely avoiding a potentially risky activity.
For example, if part of a particular route is prone to flooding during the rainy season, there are two options for risk avoidance.
- You cancel this tour, or only offer it during the dry season.
- You continue to offer this tour in an alternative format, avoiding the flooding-prone part of the route.
Although risk avoidance may seem like the ideal solution, it is not always an option. Some risks are unavoidable, for example, when your destination is in an earthquake zone. In that case, you need a different risk management strategy.
If you cannot eliminate a risk, try to reduce it. You can do this by increasing precautions or limiting risky activities as much as possible.
Prevention methods include
- safety standards (burglary, unwanted visitors, evacuation plan)
- fire extinguishers, smoke detectors, sprinkler installations
- earthquake proof building, water management
- qualified tour guides, (adventure) trek leaders, drivers.
This strategy means you transfer the financial risk to a third party, usually an insurance company. In Europe, tour operators increasingly demand that their partners have liability insurance in place. This insurance should cover possible damage and accidents involving customers during their holidays.
If other strategies are not an option, you will simply have to retain the risk, that is, accept it. This strategy is also common for relatively minor risks that are not severe or do not occur frequently. You may also consider minor risks ‘part of the job’.
Every tourism provider should have an emergency/contingency plan ready. You may think your destination is free of risks. Or you may not want to give the impression that there might be risks at your destination. However, European tourists actually increasingly ask tour operators for a risk management plan. This means tour operators may demand you have a plan in place.
Risk management plans for tourism should at least include details on:
- ensuring the safety of visitors and employees
- secure systems to communicate with all persons within the facility and the destination
- security of buildings, facilities and equipment from the effects of the disaster
- contributing trained liaison personnel to the disaster management agencies during response and recovery operations, as required
- supplying resources to support response and recovery operations
- procedures for return to normal business activities after the disaster operations.
Stakeholders in your region
A good risk management plan requires involving stakeholders in your region. You have to identify the structures and frameworks within which tourism operators and destinations can develop their own capacity to prepare for, respond to and recover from crises and disaster.
For most countries, the tourism industry is an important industry. Therefore, national governments must be involved in the risk management strategy for tourism.
Other government agencies and tourism industry sectors that should be included in a safety and security committee are:
- the national tourism administration/visitor board
- the police
- counter-terrorism/security agencies
- government bodies/departments working in customs, disaster management, foreign affairs, health, immigration, justice, transportation
- airlines and transport company associations
- hotel associations
- tour operators’ associations
- other tourism and travel representatives
- consumer groups
- retail trade organisations
- tourism safety and security-oriented research and documentation centres.
You should also join a national or international tourism association. They can be very informative and helpful when dealing with crises. For example, members of the Adventure Travel Trade Association (ATTA) can register for a course in Adventure Travel Operator Safety and Risk Management. In Nepal, ATTA members also received great support from their fellow members. For instance, ATTA organised an AdventureWeek Rebound Nepal, including a volunteering FAM trip.
In a crisis, your staff must step outside their day-to-day roles and carry out tasks that are far less familiar. In addition, they have to perform these tasks in an often highly stressful environment. This means they need to be well prepared and require firm leadership and direction.
Organise training programs for your staff on how to handle crisis situations, including introduction programmes for new staff. For instance, this could be the aforementioned course in Adventure Travel Operator Safety and Risk Management from ATTA. Training is an on-going process, so you should keep monitoring and evaluating plans and procedures.
Make sure your plan is ready for action. When implementing it in your tourism business, you should test your plan. For instance with scenario testing, where you simulate a crisis situation with your staff.
Risks may change, so maintaining and updating your plan is important.
Refer to Tourism Risk Management by the Asia-Pacific Economic Cooperation for more information.
Communication is key in successful crisis management. Communicate directly with the media and keep your website and/or social media channels up-to-date. Your staff also plays an important role in communicating with your customers on site.
Keep your information neutral and factual. Most importantly: be honest! If you are too positive, people might not believe you.
For example, the message could be: The prime minister of country X has declared that the ‘country is absolutely safe for tourists’. However, many tourists may not trust this message, based on information from the media. A more suitable message could be: So far there have been no attacks reported that were aimed at tourists. However, country X is prepared to protect tourists in a crisis situation.
Your website and social media channels
Your website should always have up-to-date information on (changes in) the safety situation in your area. Let people know that you work with professional and trained staff.
In case of a crisis, put information about the impact in your region on your website. Communicate clearly and honestly if and how your business has been affected by the crisis. Also do so if your company has not been affected, as your customers need to know this too.
Social media can be a useful tool to provide updates and communicate directly with people.
If your region is declared ‘unsafe’, commercial tour operators will probably not go there and travel insurances will not cover their clients. If you feel your region is safe to travel to, team up with other stakeholders in your region and start to lobby foreign consulates and embassies to adjust the negative travel advice for your region.
For example, after the earthquake of 2015, many countries issued a negative travel advice for the entire country of Nepal. This led to an enormous drop in tourism arrivals. Tourism companies in Nepal teamed up and started a lobby directed at the consulates and embassies to limit the negative travel advice to the areas that were really hit by the earthquake. Their lobby was successful and the negative travel advice was lifted from unaffected areas.
There are always travellers that seek destinations that have recently suffered from some form of crisis. These are often dedicated travellers, backpackers or high-end surfers. They are not necessarily poor or unwilling to spend much money at your destination. See them as front-runners. They will share their experiences online and in person with friends and family.
Experiences and blogs
People value the experience of other travellers, as they consider this information to be especially trustworthy. Therefore, you should share safety experiences from customers on your website. Let them write about how safe they felt, so other potential customers may be convinced.
Also consider collaborating with (travel) bloggers. Let them visit your destination and blog about it. Your destination does not yet have to be the same as before the crisis. Human interest stories can make a destination even more attractive, even if there are some flaws.
Consider, for example, inviting a travel blogger to come trekking in your area, which may have been damaged by a flood. This could result in the blogger describing the unique experience of visiting an area that has been partially destroyed by nature. Perhaps they wanted to do a famous trek, which is now inaccessible due to a ruined bridge. So instead they choose another safe trek, which turns out to be one of the best they ever did!
For more tips, see our top 10 tips for travel blogging.
Some crises have such an impact on a tourism destination that you need to think about repositioning your business. The genocide in Rwanda in 1994 is an example of that. When peace returned to the country, Rwanda’s tourism authorities realised that tourism was a potentially powerful growth sector. However, they had a major image problem due to the regional history of conflict and genocide.
Rwanda decided to adopt the competitive advantage model. They wanted to differentiate themselves for customers willing to pay a higher price. Rwanda’s tourism strategy creates revenue by emphasising unique value and high prices for each visitor. Now, Rwanda has created a special selling proposition through focused market segments. It aims to attract in particular:
- eco-travellers – looking to experience primates, ornithology and other niches such as butterflies and flowers)
- explorers – looking for cultural and educational experiences such as dancing and drumming, as well as socio-political interests such as conflict resolution and Gacaca.
For more information, see the Wanderlust Report on repositioning an underperforming destination.
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